Jurisdiction - China
Reports and Analysis
China – Amended Implementing Regulations Of The New Trademark Law Are Issued (Part 2).

11 March, 2014

 

 

10. TRAB’s Review Procedures


a. Review scope Of TRAB’s Review Procedures


The Draft IR has tried to clarify TRAB’s review scope. It amended the current provisions under Rules for the Review and Hearing of Trademarks issued in 2005, as specified in the table below (the underlined parts are additions/ changes):

 

Case Type Review Scope Review Principle
Review on Refusal of application TRAB shall review CTMO’s refusal decision, the facts and reasons filed by the Petitioner, the review claims, and the factual state at the time of review. In relation to registrability, TRAB may make a decision to overturn the CTMO’s decision. TRAB shall consider the applicant’s opinions before making a review decision. Comprehensive
Review on Opposition (filed by registrant of the trademark) TRAB shall review the facts, reasons and claims as described in the party’s application for review and defense. Responding arguments notfiled by the original opponent or arguments that are not submitted in review though claimed inopposition procedures shall not be within the review scope. Based on review claims
Invalidation Request TRAB shall review the facts, reasons and claims as described in the party’s application for review and defense. Based on parties’ claims
Review on Invalidation Decision (ex officio declared by CTMO) TRAB shall review CTMO’s invalidation decision as well as the facts, reasons and claims as described in the party’s application for review. Comprehensive
Review on Cancellation TRAB shall review the facts, reasons and legal basis for the CTMO to make the decision on cancelling or sustaining the registered trademark, unless the Petitioner claims the mark has now become generic or is no longer in use and needs to supplement evidence. On a case by case basis

 

b. Oral Hearing


The Draft IR clarifies that TRAB may, at the request of the party concerned or on the basis of the practical needs, decide to hear the application for review orally. The “oral hearing” is similar to the oral hearing procedure in patent invalidation cases. Current similar provisions are present but oral hearings rarely take place. It will be interesting to see how this will be implemented


c. Negotiations Between The Parties


The Draft IR states that during the review procedures, parties may negotiate a settlement on their own, and that where a settlement agreement is reached between the parties and if it is not in violation of provisions of the law, TRAB may close the case or make a decision or ruling.


11. “Proper Reasons” For Non-Use Of A Registered Trademark


The Draft IR adds an article specifying circumstances which constitute “proper reasons” for non-use of a registered trademark for an uninterrupted period of three years in nonuse cancellation cases, including

 

  • Force majeure;
  • Governments’ policy-based restrictions;
  • Insolvency liquidation;
  • Other proper reasons not attributable to the registrant.
 

12. Definitions Of “Similar Trademarks”, “Similar Goods” And “Similar Services”


The Draft IR gives general definitions of “similar trademarks”, “similar goods” and “similar services”. Specifically, it states –

 

  • The term “similar trademarks” under the new law refers to marks similar in the font style, pronunciation, meaning of the words, or in the composition and colour of the devices, or in the overall structure of all the elements combined.
  • The term “similar goods” under the new law refers to those goods that are identical or essentially the same in respect of functions, purposes of use, producers, marketing channels, target consumers, etc.
  • “Similar services” are those that are identical or essentially the same in respect of the purposes, contents, manners, objects, etc. of the services.
 

Current understanding/interpretations on “similar trademarks”, “similar goods” and “similar services” are provided in the Supreme People’s Court on Several Issues Concerning the Application of Law to the Trial of Cases of Civil Disputes over Trademarks (2002). The Draft IR simplifies the definitions based on current interpretations, i.e. it deleted “cause confusion among relevant general public” as a circumstance of constituting similar goods/services or as a condition for constituting similar trademarks under current interpretations. We consider this not a substantive change on determining similar trademarks and goods/services as the new law explicitly states that likelihood of confusion is necessary when assessing the use of a similar mark in respect of same or similar goods.

 
13. Facilitating Trademark Infringement


The new law expands the definition of trademark infringement to intentionally facilitating trademark infringements and helping others to conduct infringing activities. The Draft IR adds an article specifying what can be deemed to qualify as “providing facilitating conditions (secondary or contributory liability)”, including providing –

 

  • Storage;
  • Transport;
  • Mailing;
  • Printing;
  • Concealing;
  • Business premise; or
  • Internet service, etc.
 

The above is a non-exhaustive list. This widens the scope of facilitating trademark infringements, as under current provisions only mailing or concealing, or providing storage or transport are considered as facilitating infringement.


14. Administrative Penalties For Trademark Infringement (AIC Raid)


a. Calculation Of Illegal Turnover


Under the new law, “illegal turnover” is the basis of calculating administrative fines for AIC raids. The Draft IR provides how to calculate illegal turnover in different circumstances. Specifically, the Draft IR states –


i. “Illegal turnover” shall mean the value of the infringing products that the infringer has manufactured, stored, transported or sold. The value of the sold infringing products shall be calculated at the actual sales price. The value of the manufactured, stored, transported or unsold infringing products shall be calculated at the average actual sales price. If the actual sales price is unable to be ascertained, the value shall be calculated at the price marked on the infringing products or at the average market price of the infringed products (i.e. genuine products) if there is no marked price.


ii. The value of semi-finished infringing products labelled/marked with infringing trademarks shall be included in the value of illegal turnover and calculated at the actual costs associated with the semi-finished products.


iii. For finished infringing products to which the labels of infringing trademarks have not been attached (including stickers), the value shall also be included in the illegal turnover, if there is sufficient evidence that such products will infringe.


The Supreme Court and Procuratorate and the Ministry of Public Security provided their interpretations/opinions on calculation of illegal turnover in handling IPR infringement criminal cases (concerning goods trademarks) in the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate Concerning Some Issues on the Specific Application of Law for Handling Criminal Cases of Infringement upon Intellectual Property Rights (Fa Shi [2004] No.19) issued in 2004 and Opinions on Several Issues concerning the Application of Law in Handling Intellectual Property Right Infringement Criminal Cases (Fa Fa [2011] No.3) issued in 2011. The Draft IR makes slight amendments based on the said 2004 Interpretation and 2011 Opinions and further clarifies whether to include and how to calculate the value of semi-finished infringing products labelled/ marked with infringing trademarks.


iv. Illegal turnover of business operations infringing others’ service trademark means the infringer’s operating revenue through the infringement. This is an addition in the Draft IR.


b. Repeated Infringement


The new law provides for punitive punishment for repeated infringement, i.e. where an operator has engaged in infringing activities more than two times within five years, or if other serious circumstances exist, he shall be given a heavier punishment. The Draft IR elaborates on what circumstances can be considered “engaged in infringing activities more than two times within five years” and “other serious circumstances” under the said provisions. Specifically, it states that –


i. It shall constitute “engaged in infringing activities more than two times within five years”, if –

 

  • the same operator was penalised by an AIC or a Court to have infringed others’ trademark rights, or
  • there is verified evidence that the same operator has committed trademark infringing acts.
 

ii. Any of the following circumstances shall be considered “other serious circumstances”:

 

  • large-scale infringement; or
  • long-time infringement; or
  • the infringement caused severe social influence.
 

c. Seller Obtaining The Goods Lawfully

 

The new law states that if infringing goods are sold, and the seller is able to prove that the goods are lawfully obtained, the AIC shall order cessation of sale. This means that the new law allows AIC not to impose a fine on the seller. The Draft IR specifies that the following can be considered “proof that he has obtained the goods lawfully”:


i. Verified supplier list and payment receipt with a supplier seal; or
ii. Verified purchasing contract signed by the supplier and the seller; or
iii. Legal purchase invoice can be provided and records on such invoice correspond to the goods involved; or
iv. Other circumstances that is able to prove that the goods involved were obtained lawfully.


In practice, the verification of the authenticity of this evidence will become problematic.


15. Right Holder’s Obligation To Assist On Identification/Verification Of Suspected Infringing Products In AIC Raid Cases


The Draft IR confirms the trademark right holder’s obligation to assist in identifying/ verifying the infringing products in AIC raid cases. It states that during a raid action against trademark infringement, the AIC may ask the trademark right holder to identify/ verify the products. The right holder shall provide assistance on identification/verification of the products and issue written opinions. It also states that where the party concerned is not able to provide the related authorization letter on the suspected infringing products seized on scene, the AIC can recognize the products as infringing products directly.


16. Madrid International Registration Of Marks


The Draft IR adds a Chapter on Madrid International Registration of Marks. The added provisions are in accordance with the Madrid Agreement and Protocol Concerning territorial extension, and are based on current Chinese Measures for the Implementation of Madrid International Registration of Marks issued by SAIC in 2003 (2003 Implementation).


a. Applications For International Registration Of Marks With China As The Country Of Origin


i. Qualifications of the applicant – The Draft IR confirms that the applicant shall have a genuine and effective industrial and commercial business place in China, or have its domicile in China, or have the nationality of China.

ii. For applications in accordance with the Madrid Protocol, the Draft IR clarifies that, for a qualified applicant, if his/its trademark has been registered with CTMO, or an application for registration of the trademark has been filed and has been accepted by CTMO (this is added), he/it may apply for international registration of the trademark in accordance with the Madrid Protocol.
iii. The Draft IR confirms that the designated goods/services of application for international registration of mark shall not be beyond the goods/services coverage of the basic national application or registration of the trademark.
iv. The current 15-day time-limit for the applicant to make supplements or amendments where necessary is extended to 30 days.


b. Examination And Oppositions Procedures Of Applications Designating China For Territorial Extension


i. The Draft IR states that CTMO shall examine the applications designating China for territorial extension and make a decision in accordance with Chinese Trademark Law within the time limit for Rejection prescribed in the Madrid Agreement or Madrid Protocol and inform the International Bureau of WIPO. It means that the 9-month time limit for examination of national trademark applications under the new law does not apply to international applications designating China for territorial extension.


ii. Timing of opposition procedures specified in the Draft IR are provided in the table below –

 

File Opposition  Within 3 months as of the first day of the next month after the WIPO’s “Gazette of International Marks” is published
CTMO to notify International Bureau of Opposition filed Within the time limit for Rejection prescribed in Madrid Agreement or Madrid Protocol
Trademark applicant to file Defense Within 30 days upon receipt of CTMO’s notification forwarded by the International Bureau
CTMO to issue Decision on Opposition Within 18 months as of the expiry of the time limit for Rejection, the date of the coming into force of the administrative decision or court judgment

 

c. Follow-Up Assignment/Abridgement Of Trademark Registrations Designating China For Territorial Extension


i. Assignment


The Draft IR confirms that the assignor shall at the same time assign all of his/its registered trademarks identical with or similar to the trademark to be assigned in respect of the same or similar goods/services. Where the assignor fails to apply for assigning his/its related trademarks simultaneously, the current 30-day time limit for the assignor to make a correction upon receipt of CTMO’s notification is extended to 3 months. The Draft IR also states that if the assignor fails to make the correction before the expiry of the time limit, or if the assignment may cause confusion or other adverse effects, the CTMO shall make a decision that the assignment is invalid in China and shall declare that to the International Bureau.


ii. Limitation


The Draft IR states that where the limitation of goods/services contents does not conform to the requirements of China on classification of goods and services, or is beyond the scope of original designated goods/ services, the CTMO shall make a decision that the limitation is ineffective in China and shall declare that to the International Bureau.


17. Trademark Agency’s Obligation To Receive And Sign For Documents Issued By CTMO/TRAB


The Draft IR adds the trademark agency’s obligation to receive and sign for the legal documents issued by CTMO/TRAB to the party concerned. It states that after the documents have been served to the related trademark agency, the service to the party concerned shall be deemed completed; where the trademark agency is not able to serve the documents to the party due to objective reasons, it shall explain in writing the situation and return the documents to the CTMO/TRAB within 15 days upon receipt, and then CTMO/TRAB will serve the documents to the party by public announcement.

 

18. Trademark Agents’ Practices


To further regulate the practice of the trademark agencies based on the new law, the Draft IR expressly sets out a number of provisions which include the qualifications of a Trademark Agency and a Trademark Attorney, and requirements for trademark agencies’ activities and how cases are handled etc.

 

Related: 

 

Amended Implementing Regulations Of The New Trademark Law Are Issued (Part 1)

 

Hogan Lovells

 

For further information, please contact:

 

Deanna Wong, Partner, Hogan Lovells
deanna.wong@hoganlovells.com

 

Rae Yan, Partner, Hogan Lovells
rae.yan@hoganlovells.com

 

William Fisher, Partner, Hogan Lovells
william.fisher@hoganlovells.com

 

Feng Zhen, Partner, Hogan Lovells
zhen.feng@hoganlovells.com

 

Henry Wheare, Partner, Hogan Lovells
henry.wheare@hoganlovells.com

 

Hogan Lovells IP Practice Profile in China

 

Homegrown IP Law Firms in China 

 

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